Economic Goods and Services

1.3 READING

Economic Goods and Services

People begin to learn about economics when they are :siill very young. Even before they start school, they make two very important economic discoveries. They find that there are lots of things in the world they want. They also lind that they cannot have them all. There is a big gap between what they want and what I hey сип have.

Later, young people learn another lesson. When they watch television commercials, they discover that there are thousands of things they or (heir parents could buy. Gradually, they settle into two major economic roles: consumer and producer?

In the role of consumer, a person buys goods and services lor personal use, not for resale. Consumer goods are products, such as food, clothing, and cars, that satisfy people's economic needs or wants. Some consumer goods, such as food, do not last a long time. Other goods, such as cars or VCRs, last longer. Sooner or later, though, consumer goods are used up. Bananas are a typical example of perishable goods, by "perishable" we mean goods which cannot be stored for any length of time without going bad. Most foodstuffs are in the perishable category. Services are actions , such as haircutting, cleaning or teaching. Services are used up at the time they are provided.

A producer makes the goods or provides the services that consumers use. A person who makes lemonade and then sells it is producing goods. A person who shovels snow during the winter or clerks in a store is providing a service. Students working after school or during the summer earn money to buy some of the things they want - records, books, or a car. They are learning about the role of the producer.

In order to produce something, however, a person must first have right resources. Resources are the materials from which goods and services are made. There are three kinds of resources: human (people), natural (raw materials), and capital resources (capital, or the money or property). If either of these resources is missing, production will stop.

The economy as a whole, like an individual, can produce only products for which it ^:

 has the right-kind-of resources. No economy can produce the things people want'if it

doesn't have enough of the right kinds of resources. And no economy has an unlimited supply of resources. In other words , there is a scarcity of resources. Scarcity is the situation that exists when demand for a good, service, or resource is greater than supply. In economics, you will study how people use their resources, to make the goods and to provide the services they want. Economics is also the study of how people decide who will get the goods and the services produced. Human wants tend to be unlimited, but human, natural, and capital resources are, unfortunately, limited.

The basic economic questions individuals and nations face are: What goods and services will be produced? How will they be produced ? Who will get them ? How much will be produced for now and how much for the future? The answers to the questions depend on a country's human, natural, and capital resources, and also on its customs and values. Each country will answer three questions in a different way.